2 Top Value Stocks to Hedge Against Inflation Woes
Investors are justifiably worried about facing a double whammy in the form of inflation and high bond yields in the near future. Stocks tend to do OK in response to a small rise in inflation. Anything beyond 3% or 4%, however, would spell trouble as companies cannot raise prices more than what consumers can afford, hurting their real revenue. We already hit that mark back in April.
If that wasn't enough, bond yields are almost guaranteed to rise sharply as fixed-income investors need at least 3.5% to break even with inflation, compared to a 1.5% yield on the 10-year Treasury right now. When bond yields rise, it puts pressure on stocks as it gives investors the option to choose something that is still rewarding yet far less risky. This is especially bad for high-flying growth stocks.
Luckily, two fantastic value stocks could act as buffers to inflation. They are Barrick Gold (NYSE: GOLD) and Regeneron Pharmaceuticals (NASDAQ: REGN). Let's look at what they have in store for investors.
Source Fool.com
